From being selected as one of Registered Rep.'s Outstanding Brokers in 1981 to celebrating the 20th anniversary of his Heartland Value Fund this year, Heartland Advisors president Bill Nasgovitz has always stuck by this principle: Ignore the present or even the recent past. What matters to him is weathering dips and focusing on 10-year returns. So far, so good: His fund has provided an average annual return of 15.9 percent since inception, easily beating the S&P 500. Nasgovitz talked to Registered Rep. about his investing style and investor impatience.
Registered Rep.: How have investor attitudes toward funds changed since you started your fund?
Bill Nasgovitz: Human nature certainly hasn't changed; everyone is still driven by fear and greed. People are a lot more short-term-oriented now; investors are rare, as speculators and those with a short-term horizon proliferate. That's to the detriment of investment success. Managements and investors have been focused on quarterly performance, what did I do this year, this quarter and so on. That's no way to thrive.
RR: Why do you think such a change has taken place?
BN: It's information overload. The press is a part of that; they accentuate the negative and hype the positive, because it makes for good reading. But people just have too much information, too many consultants, too many “experts.” People have lost the simple thought process of making an investment. It's viewed as a piece of paper that should be traded, maybe on a daily basis.
RR: Is there anything that might change the way the average investor thinks?
BN: I don't see it. We're a country of spenders, not savers. The savings rates of some of these countries in Asia is at almost 40 percent. We just dipped into a negative. It's been a long-term downward spiral. With capital gains rates at 15 percent, and with the dividends exclusion, why wouldn't you do long term? But people don't. When you look at it vs. other countries, you see the U.S. could be in some serious trouble.
